(Adds details of the new funds)
By Makiko Yamazaki
TOKYO, May 8 (Reuters) - Mitsubishi UFJ Financial Group
Inc (MUFG) said it would launch two new venture debt
funds worth $400 million in total for Japanese and European
startups, reflecting strong funding demand as the market for
initial public offerings remains dull.
The debt funds, with $250 million for Europe and 20 billion
yen ($148.35 million) for Japan, will be created through Mars
Growth Capital, a Singapore-based joint venture between MUFG and
Israeli financial tech firm Liquidity Capital, the top Japanese
lender said on Monday.
With a rise in interest rates and market volatility hurting
investment flows and demand for new stock listings globally,
demand for venture debt has risen among startups.
Since its inception in 2021, Mars has provided debt
financing to 30 middle and later stage startups in Asia through
two existing funds worth $750 million in total.
"We've seen very strong needs for debt financing in the
(startup) market," Ryutaro Hiroshima, co-CEO of Mars, said at a
briefing. "We've decided to expand our business to meet such
demand."
Debt financing is also in high demand as it allows startups
to raise funds without diluting their existing shareholder
equity or ownership, MUFG said.
The new Europe fund will take over its capital from the
existing funds, while the Japan fund will take in fresh money
from MUFG and other investors.
Offering debt to startups with no proven track record of
stable revenue involves higher risks for lenders, but Mars
controls such risks with its artificial intelligence-driven
credit scoring model that forecasts future cash flows from
real-time financial and accounting data.
If Mars' portfolio firms eventually choose to go public,
MUFG plans to support their IPOs with its U.S. alliance partner
Morgan Stanley .
The Japanese lender said it is also studying the feasibility
of expanding the Mars business to the United States.
($1 = 134.8200 yen)
(Reporting by Makiko Yamazaki; Editing by Edmund Klamann and
Jacqueline Wong)
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